A
former Chief Executive of the Ghana National Petroleum Corporation (GNPC) Alex
Mould is proposing the privatisation of the Tema Oil Refinery (TOR) to put the
firm on a strong footing.
According to Mr Mould privatisation could be one of the surest ways to deal
with the challenges that have prevented the refinery from making good profits
over the years.
Background
Mr Alex Mould’s proposal follows revelations in an internal management report
which suggested that the company was facing some serious liquidity challenges
that threatened its operations.
The Tema Oil Refinery Variance Report also notes that the liquidity challenge
would make it difficult to meet operational expenses, such as utility bills,
insurance premiums as well as statutory payments.
The report also revealed that the company was not in a good financial position
to even pay its debts.
All the scenarios and financial assessment captured in the report indicate that
the company was under serious stress.
It was clear in the documents that the company indeed made a loss of GHS185
million as at the end of April this year.
In 2017 TOR was said to have made the highest Gross Profit with the highest
plant downtime i.e. the highest non-working days of the plant. However, some
have argued that there is an inverse correlation with gross profit and
plant-uptime.
The more the plant is not working the higher the gross profit of TOR
Putting TOR on a strong footing
The Former GNPC boss wants the government to improve the current state of
infrastructure at the facility.
“I would advise the government to fix Tema Oil Refinery if it believes
that the rate of return that they put into Tema Oil Refinery is good for them,”
he said.
He also argued that government must look at TOR’s model again – that is whether
it should still be a refinery or use it as a tank farm or bring on board a
strategic investor to turn around the operations of the facility.
The former GNPC boss has also advised that the government should engage Bulk
Distribution Companies (BDCs) to invest in the refinery.
But the managers of TOR have said they were putting in measures that will turn
around the company’s fortunes.
The Head of Finance at the Refinery, Mr Daniel Appiah, told Joy Business that
steps to clear a GHS1.85 billion debt and the resumption of full operation
would deal with the challenge.
TOR debt recovery levy
Government around 2003 introduced some marginal levies on the price build-up on
diesel and petrol.
This was expected to be used to reduce the TOR debt over the years.
The government later through the ESLA PLC issued bonds to clear the debts.
As at the end of April this year, the debt has been reduced to GHS1.85 billion
after GHS1 billion of the debt was cleared by ESLA.
Some industry watchers have argued that if all the debts are cleared, then
there could be a strong case for these levies to be removed. But the Former
GNPC boss Alex Mould does not think so.
myjoy
